An Island That Hungers and Thirsts

National Regulations and Levies are Making Imported Food Stuffs and Alcoholic Beverages Rare Commodities in Bali.

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(11/3/2008)

Recent changes in custom duties charged on imported food and beverage and burdensome certification requirements for foreign food stuffs threaten to soon find the shelves of many specialty food stores in Bali and elsewhere in Indonesia largely bare.

Dry Holidays Ahead?

Increases of as much as 300% in the import duties charged for wine and liquor and a firm crackdown on importation procedures have left wine and bottle shops with greatly diminished inventories and substantially higher prices for those alcoholic beverages still on offer.

While virtually impossible to get local wine and spirit suppliers to speak "on the record," regarding the current shortage, the problem is being blamed on the sudden closure of murky "back doors" that are traditionally used to supply local demand for alcoholic beverages while managing to somehow side-step duty charges. With that informal route now firmly closed, many postulate that no one is prepared to commit to the expense of a large order of wine and liquor at the official high custom rates for fear that the "back doors" might suddenly open again, leaving the "legal" importer with a stock of alcoholic beverages that have cost more than three times the commercial rates.

When this impasse will end is anybody's guess with the current stand-off with custom officials making it increasingly difficult to secure supplies of wine and liquor for local hotels and restaurants.

And the Cupboards Were Bare

In a similar move motivated by a desire to protect local manufacturers, increase tax revenues, and protect the health and welfare of Indonesian consumers - the National Food and Drug Monitoring Agency (BPOM) introduced complicated, and some claim draconian, requirements for the certification and registration of imported products.

According to the Jakarta Post, recent raids on imported food stores in Jakarta saw "more than half" of existing inventories seized and destroyed for failing to be certified as safe by the BPOM.

Refusing to accept testing and certification certificates from the original country of origin, the BPOM are requiring that all imported products undergo a detailed Indonesian-based evaluation. That evaluation requires details of the manufacturing process and all ingredients used in their manufacture, information many foreign food producers are reluctant to share with Indonesian food importers who must initiate the certification process. The BPOM rules also stipulate that food labels and ingredients be printed in the Indonesian language.

While Indonesian authorities are still trying to determine which local testing agencies will be acceptable, the final testing requirements may prove too burdensome and expensive for all but imported products distributed on a large scale in Indonesia, effectively closing Indonesia's doors for the importation of specialty items consumed on a limited scale.

While discussions are underway with the relevant Indonesian government agencies to resolve the problem, food importers in Bali and Jakarta are reporting that their warehouses are becoming increasingly bare.

The strict application of food certification rules in combination with sharp increases in customs duties are combining to what is tantamount to an almost impenetrable trade barrier that may soon see local tables bare of imported food and beverages products.